Multinationals are a positive force

  • 29 January 2000

A lead editorial headed "The world's view of multinationals" in The Economist reaches the conclusion that they should in the main be seen as a powerful force for good. Describing the multinationals as the most visible aspect of globalization, the editorial says: "They spread wealth, work, technologies that raise living standards and better ways of doing business."

The editorial describes the protests mounted against the world’s largest multinational corporations at last December’s ministerial meeting of the World Trade Organization, an d on other occasions. It notes that in the 1990s, the multinationals were lauded as the bringers of foreign capital, technology and know-how.

“Yet now the hostility has returned. One explanation is the sheer speed at which multinationals have recently expanded abroad even to rich, well-run countries, their sheer size can seem threatening.”

In the view of The Economist, multinationals are at least as accountable to their shareholders and the law and a good deal more transparent than the average NGO. Individual firms are as capable of doing harm as is any other entity. “But as a class, the multinationals have a good story to tell. In the rich world, according to OECD research, foreign firms pay better than domestic ones and create new jobs faster.

“That is even more true in poorer countries: in Turkey, for example, wages paid by foreign firms are 124% above average and their work forces have been expanding by 11.5% a year, compared with 0.6% for local firms,” the editorial said. “Big foreign firms are also the principal conduit for new technologies, as is clear from the fact that 70% of all international royalties on technology involve payments between parent firms and their foreign affiliates. As for the environment, most research suggests that standards tend to converge upwards, not downwards.”